Central Bank of Kenya Holds Interest Rate at 8.75%

On Wednesday, the Central Bank of Kenya (CBK), led by Governor Kamau Thugge, announced the decision to keep the benchmark interest rate steady at 8.75%. This marks nearly two years of maintaining the rate as the bank assesses the potential economic impacts of the ongoing conflict involving the U.S. and Israel and Iran.

The move aims to manage inflation levels, which stood at 4.4% in March, slightly down from 4.3% in February, and to stabilize the exchange rate. The CBK's Monetary Policy Committee (MPC) noted the risks posed by global energy prices due to Middle Eastern tensions, which could disrupt supply chains and impact the global economic outlook.

The bank has previously cut interest rates by a total of 425 basis points since August 2024. Additionally, the CBK revised its economic growth forecast to 5.3%, down from an earlier estimate of 5.5%, in response to emerging risks in foreign exchange reserves, which were reported at $13.7 billion in early April.